Getting into real estate investing can seem like a daunting task. There is so much to learn, so much to read, so much information and so much to do that it can be very easy for one to get lost in the maze and just feel plain overwhelmed. I have seen more than one newbie simply get discouraged by it all and quit before even getting started. But people need to understand that changing professions and the path you are on is not quick and easy. If it were, everyone would do it. What can reduce these overwhelming feelings and put you on a path to success? A step by step plan can.
Just as you would likely not take a thousand mile journey without some kind of plan, neither should you begin your real estate journey without some kind of plan as well. This plan does not have to be perfect. In fact, you can expect many a detour. But ultimately it should get you to your destination. You plan should be manageable, a bit flexible and tailored to your own specific desires and circumstances. What steps should your plan include? Here are some suggestions.
10 Steps to Find Your Focus (& Buy That First Property!)
Write Down Your Goals
I suggest some short, medium and long terms goals. You might, for example, set a short term goals of listening to ten real estate podcasts or reading ten real estate books, a medium goal of buying one house to hold for rent and a long term goal of quitting your 9 to 5 job. Whatever goals you decide upon, just do one thing with them: WRITE THEM DOWN!
I equate learning about real estate investing to going to going back to school. You will have lots to read, listen to and watch (podcasts, etc.) and have lots of homework. No more TV. No more gaming. You now have goals to achieve.
Join a Real Estate Club
Real estate clubs can be a great resource, as you will get to meet and network with other investors in your area. I have been a real estate club member myself for over a dozen years. It is at these clubs that you can begin to see what you have been reading about put into practice.
Be careful, though; just as with anything, there are good and bad real estate clubs out there. Make sure the one you attend is educational and not just selling you something. You should be able to tell the difference after a few meetings. Sit back and watch at first and don’t be pressured into buying courses, mentoring or properties. You can do that later on if you choose. For now, just listen, watch and learn.
Get Your Finances in Order
Do a personal financial statement to see where you stand. Set a household budget and clean up some debt if you need to. If possible, begin to build up some cash reserves and capital.
Pick a Strategy
Do you want to buy and hold, retail flip, or flip to other investors? After reading and learning about each strategy, decide which one is right for you. Ultimately you should be doing a bit of all three, but let’s not bite off more than we can chew right now. Pick one of the three based upon the goals you outlined above and your current financial status, and focus on starting there.
Pick a Place to Farm
Remember the three most important words in real estate are location, location, location — and I suggest picking a certain location to target in order to keep your focus and save time. It is very difficult to keep the numbers for an entire city in your head, but very easy to feel overwhelmed trying to do so.
Plus, do you really want to be driving all over the city? Perhaps pick one or two particular areas that you are familiar with, and get to know those areas like the back of your hand. You should learn the streets, rents and prices. Learn about the dynamics of the area. Is it up and coming or a war zone? Learn who is buying and who is selling. All of this will be vital when you are ready to pull the trigger later on.
Practice What You Have Learned
You can and should test your new found knowledge here on the BiggerPockets Forums and perhaps with others at your local real estate club. Run through some scenarios with others and see if your conclusions match theirs.
Begin Building Your Team
You need help to be successful. Make it a goal to meet real estate agents, attorneys, accountants, contractors, etc. who can potentially help you with your investing. Invite them to lunch and discuss your ideas. You can learn a lot and make some great contacts this way.
Talk to Lenders
Talk to as many banks and private lenders as you can to see where you stand and adjust your efforts based on their feedback. You can find good leads at your local real estate club. Financial backing using other people’s money is one of the keys to success in this business. If you can get that before you get started, you will be ahead of 90% of everyone else.
Pull the Trigger
You are ready. Do not let all of this action you have taken go to waste. Use it.
These ten steps may seem like a lot and may also seem a bit vague. They have to be so you can tailor them to your specific circumstances. Follow and fine tune them, and they will help you focus and reduce that overwhelming feeling.
Becoming a real estate investor should be an exciting journey as you learn new things and put that learning into practice. Just remember that every journey, no matter how long, begins with that first step. Be sure to take it.
Newbies: Where are you in the process of buying your first property?
Let us know with a comment!